A £3m gift, a diamond and a castle; the story of a successful section 423 claim (Thomas v Jones)
Restructuring & Insolvency analysis: In this case, trustees in bankruptcy successfully obtained judgment under section 423 of the Insolvency Act 1986 (IA 1986) against a bankrupt’s former business partner and his son. The court held that John Jones had gifted £3m to his son, Adam Jones, (the gift) with the purpose of keeping the money out of the hands of Mr Hamilton, to whom John Jones owes over £2m following previous litigation in April 2019. The gift was accepted by all parties to be a transaction at undervalue and the main focus of the trial was on John Jones’ purpose in giving the gift. The defendants relied on a deed of gift and John Jones’ financial capacity to satisfy any judgment as evidence negating any IA 1986, s 423 purpose. The judgment also sets out the applicable law on IA 1986, s 423 cases, as distilled in Ethos Solutions Ltd; Purkiss v Kennedy and others, Lord Justice Newey at para [18]. Written by Stefan Ramel, barrister, at Guildhall Chambers, assisted by Jennifer Edwards, pupil barrister at Guildhall Chambers.